WESTERN ENERGY SERVICES CORP. RELEASES THIRD QUARTER 2024 FINANCIAL AND OPERATING RESULTS
CALGARY, AB, Oct. 29, 2024 /CNW/ - Western Energy Services Corp. ("Western" or the "Company") (TSX:WRG) announces the release of its third quarter 2024 financial and operating results. Additional information relating to the Company, including the Company's financial statements and management's discussion and analysis ("MD&A") as at September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023 will be available on SEDAR+ at www.sedarplus.ca. Non-International Financial Reporting Standards ("Non-IFRS") measures and ratios, such as Adjusted EBITDA, Adjusted EBITDA as a percentage of revenue, revenue per Operating Day, revenue per Service Hour and Working Capital, as well as abbreviations and definitions for standard industry terms are defined later in this press release. All amounts are denominated in Canadian dollars (CDN$) unless otherwise identified.
Operational and Financial Highlights
Three Months Ended September 30, 2024Financial Highlights:
Third quarter revenue of $58.3 million in 2024 was $3.3 million (or 6%) higher than the third quarter of 2023, as higher contract drilling revenue in Canada, was offset partially by lower contract drilling revenue in the US and lower production services revenue.
The Company incurred a net loss of $1.2 million in the third quarter of 2024 ($0.04 net loss per basic common share) as compared to a net loss of $1.3 million in the third quarter of 2023 ($0.04 net loss per basic common share) as higher Adjusted EBITDA and other items were offset by decreases in stock based compensation expense and finance costs.
Adjusted EBITDA of $11.4 million in the third quarter of 2024 was $0.4 million (or 4%) higher compared to $11.0 million in the third quarter of 2023 due to higher drilling revenue in Canada, which was offset partially by lower production services activity in Canada, the continued slowdown of drilling activity in the US, higher operating costs and higher administrative costs due to one-time reorganization costs in the third quarter of 2024.
Third quarter additions to property and equipment of $8.2 million in 2024 compared to $7.3 million in the third quarter of 2023, consisting of $5.2 million of expansion capital related to rig upgrades and $3.0 million of maintenance capital.
On August 7, 2024, the Company made a voluntary $10.0 million repayment on its Second Lien Facility (as defined in this press release) through available cash on hand and a draw on the Company's Credit Facilities (as defined in this press release).
Operational Highlights:
In Canada, Operating Days of 1,115 in the third quarter of 2024 were 232 days (or 26%) higher compared to 883 days in the third quarter of 2023. Drilling rig utilization in Canada was 36% in the third quarter of 2024, compared to 28% in the same period of the prior year, mainly due to improved demand for the Company's upgraded rig fleet.
Revenue per Operating Day in Canada averaged $31,141 in the third quarter of 2024, a decrease of 2% compared to the same period of the prior year mainly due to changes in rig mix, which were offset partially by higher day rates and lower third party recoveries.
In the US, drilling rig utilization averaged 36% in the third quarter of 2024, compared to 34% in the third quarter of 2023, due to the change in the number of marketed rigs in 2023, as Operating Days decreased from 249 days in the third quarter of 2023 to 229 days in the third quarter of 2024.
Revenue per Operating Day in the US for the third quarter of 2024 averaged US$28,429, an 8% decrease compared to US$30,898 in the same period of the prior year, mainly due to changes in rig mix.
In Canada, service rig utilization was 31% in the third quarter of 2024, compared to 33% in the same period of the prior year, as Service Hours decreased by 10% to 12,525 hours from 13,984 hours in the same period of the prior year, as customers deferred work to later in the year as capital budgets are fully utilized.
Revenue per Service Hour averaged $979 in the third quarter of 2024 and was 3% lower than the third quarter of 2023, due to area specific rig requirements.
Nine Months Ended September 30, 2024Financial Highlights:
Revenue for the nine months ended September 30, 2024, decreased by $13.8 million (or 8%), to $163.4 million compared to $177.2 million in the same period of 2023, as revenue was negatively impacted by lower activity in contract drilling in the US due to lower commodity prices in the first and third quarters of 2024 and lower third party recoveries in Canada, but positively impacted by higher production services activity in 2024.
The Company incurred a net loss of $4.9 million for the nine months ended September 30, 2024 ($0.14 net loss per basic common share) as compared to a net loss of $4.7 million in the same period in 2023 ($0.14 net loss per basic common share). The change can mainly be attributed to a decrease in stock based compensation expense, finance costs, and an increase in income tax recovery, which were partially offset by a decrease in Adjusted EBITDA and other items.
Administrative expenses for the nine months ended September 30, 2024 were $2.9 million higher than the same period of 2023, due to higher employee related costs including one-time reorganization costs of $2.8 million incurred in 2024.
Adjusted EBITDA of $31.9 million for the nine months ended September 30, 2024 was $2.5 million (or 7%) lower compared to $34.4 million in the same period of 2023 and included one-time reorganization costs of $2.8 million. After normalizing for the one-time reorganization costs, Adjusted EBITDA for the nine months ended September 30, 2024 would have totalled $34.7 million, an increase of $0.3 million from the same period in the prior year. Adjusted EBITDA in 2024 was comparable to the prior year as lower drilling activity in Canada and the US was partially offset by improved activity in production services.
Year to date 2024 additions to property and equipment of $15.8 million compared to $19.2 million in the same period of 2023, consisting of $10.0 million of expansion capital related to rig upgrades and $5.8 million of maintenance capital.
On March 22, 2024, the Company extended the maturity of its $35.0 million syndicated revolving credit facility (the "Revolving Facility") and its $10.0 million committed operating facility (the "Operating Facility" and together the "Credit Facilities") from May 18, 2025 to the earlier of (i) six months prior to the maturity date of the Second Lien Facility (as defined in this press release) which is currently November 18, 2025, or (ii) March 21, 2027 if the Second Lien Facility is extended. The total commitments under the Credit Facilities are unchanged and there were no changes to the Company's financial covenants, which are described in the Company's third quarter 2024 MD&A under "Liquidity and Capital Resources".
Operational Highlights:
In Canada, Operating Days of 2,724 days for the nine months ended September 30, 2024 were 18 days (or 1%) lower compared to 2,742 days for the nine months ended September 30, 2023. Drilling rig utilization in Canada was 29% for the nine months ended September 30, 2024, compared to 30% in the same period of the prior year, mainly due to customers cancelling or deferring their programs into the latter part of 2024, as a result of lower natural gas prices throughout 2024.
Revenue per Operating Day in Canada for the nine months ended September 30, 2024 averaged $32,373, which was 1% lower than the same period of the prior year mainly due to lower third party recoveries in 2024.
In the US, drilling rig utilization averaged 28% for the nine months ended September 30, 2024, compared to 39% in the same period of the prior year, with Operating Days decreasing from 843 days in the nine months ended September 30, 2023 to 546 days in the same period of 2024 due to lower industry activity.
Revenue per Operating Day in the US for the nine months ended September 30, 2024, averaged US$29,904, a 7% decrease compared to US$32,038 in the same period of the prior year, mainly due to higher day rates which were offset by lower third party recoveries in 2024 and higher mobilization revenue in 2023.
In Canada, service rig utilization of 36% for the nine months ended September 30, 2024 was higher than 33% in the same period of the prior year with Service Hours increasing by 5% from 42,081 hours in 2023 to 44,368 hours in 2024.
Revenue per Service Hour averaged $1,023 for the nine months ended September 30, 2024 and was 1% lower than the nine months ended September 30, 2023.
Selected Financial Information
(stated in thousands, except share and per share amounts)
Three months ended September 30
Nine months ended September 30
Financial Highlights
2024
2023
Change
2024
2023
Change
Revenue
58,343
55,003
6 %
163,358
177,196
(8 %)
Adjusted EBITDA(1)
11,433
11,033
4 %
31,911
34,369
(7 %)
Adjusted EBITDA as a percentage of revenue(1)
20 %
20 %
-
20 %
19 %
5 %
Cash flow from operating activities
5,404
13,267
(59 %)
32,466
45,085
(28 %)
Additions to property and equipment
8,223
7,348
12 %
15,760
19,218
(18 %)
Net loss
(1,190)
(1,267)
6 %
(4,871)
(4,691)
(4 %)
, basic and diluted net loss per share
(0.04)
(0.04)
-
(0.14)
(0.14)
-
Weighted average number of shares
, basic and diluted
33,843,022
33,841,781
-
33,843,017
33,841,478
-
Outstanding common shares as at period end
33,843,022
33,843,009
-
33,843,022
33,843,009
-
(1)
See "Non-IFRS Measures and Ratios" included in this press release.
Three months ended September 30
Nine months ended September 30
Operating Highlights(2)
2024
2023 Change
2024
2023
Change
Contract Drilling
